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Kamala Harris's campaign strategy has been to draw broad points about how she will approach the job of President, while being mostly vague on policy specifics. To that end—and as of this writing—she hasn't said much about it taxes except for the increase in the corporate tax rate and no gratuity taxes.
However, most experts agree that she is likely to continue and defend most, if not all, of President Biden's already stated tax policies, with an emphasis on raising taxes on wealthier individuals and corporations to fund priorities its and to pay the deficit.
As a certified public accountant, I see at least 10 important ways a Harris administration will affect your personal and business tax bill. Let's unpack.
Related: 10 important ways a second Trump administration could affect your taxes
Tips
Like her opponent, Harris has defended a no tax on tip policy aimed at service industry workers. Not only would this change help businesses attract more workers, but it could also allow employers to rely more on compensating their customers' tips rather than paying more wages. In addition to the loss of tax revenue from this plan, opponents of the measure say it's discriminatory and could lead to corporate abuse unless there are very strict definitions of what qualifies as “tip” income.
Increase in corporate tax
The current tax rate paid by “C” Corporations is 21%. Harris has been struggling lately increasing this rate to 28%. Such a change would certainly increase the taxes paid by the companies of this group. According to the Tax Foundation, a 28% corporate tax rate would leave American companies facing a higher tax environments in the world.
TCJA 2017 Expiry Allowance
The Tax Cuts and Jobs Act (TCJA) of 2017 contained many tax benefits for both large and small businessesincluding reduced corporate, personal and estate tax rates, incentives for research and development spending and investment in capital equipment and a significant break for small businesses (Qualified Income Tax Credit). However, many are trying to make some or all of these provisions permanent (or extend them); Harris has been unclear in which provisions – if any – she would support going forward.
Unrealized gains
President Biden and leading Democrats like Bernie Sanders and Elizabeth Warren have long advocated a tax of up to 25% on unrealized gains for those with wealth above $100 million, and Harris bows even to this. Although previously there were arguments for the constitutionality of such a measure, a the last decision of the Supreme Court opened the door to allowing such a tax. The tax on unrealized gains will include regular and complex valuations of property such as artwork, real estate and other personal assets.
Enhanced enforcement
Under the Biden administration, 80 billion dollars has been allocated to the Internal Revenue Service to update its systems and improve enforcement. Just last year, IRS Commissioner Daniel Werfel publicly announced the agency's intention to aggressively go after mostly wealthy taxpayers (those making more than $400,000 a year) and those who owed taxes. Harris is unlikely to resist these moves and may encourage and even propose more funding.
Increasing the childcare tax credit
Like President Biden, Harris has supported increasing the child care tax credit. Currently, it provides up to $2,000 per child under age 17. She PrOPOSAl is to increase this loan to $6,000. President Trump is too proposing an increase for this loan up to $5,000 per child. In addition to providing benefits to parents of young children, the loan can help pay for additional child care services that will help employees miss less work.
Increase in capital gains tax
President Biden has proposed raising the tax charged on capital transactions (for example, sales of stock, property and equipment) from the current rate of 20% to as much as 44.6%. Although such an increase would certainly raise more tax revenue, some – like myself – are concerned about the impact on business owners who buy and sell capital assets as well as those who make investments or plan to exit their businesses in the future.
Medicare tax increase
Harris has expressed no opposition to her party's support for raising the Medicare tax from the current one 3.8% to 5% for those earning more than $400,000 a year.
New Crypto Taxes
The crypto industry has grown significantly over the past few years and has not escaped the attention of the federal government. In the past budget proposalsPresident Biden has imposed a new “crypto mining tax” and included crypto transactions as part of “wash sales” so that any loss on the sale of crypto assets can only be realized if the same asset is not repurchased within 30 days. So far, Harris has remained silent on these proposals.
Rising tariffs in China
Both former President Trump and President Biden have encouraged higher tariffs on imported Chinese goods. Earlier this year, President Biden announced a significant increase in tariffs in some Chinese materials, including aluminum, steel, semiconductors and electric vehicles. Harris has not stated her position on this, although she is likely to continue to support these tariffs.
A Harris presidency — assuming the support of Congress — would almost certainly mean a tax hike for many business owners, and certainly those making more than $400,000 a year. Many think the increases can be afforded and the funds raised will help pay for its programs and hopefully reduce budget deficits.